As head of Nielsen’s global business development and mergers and acquisitions business, Itzhak Fisher is used to evaluating young companies. The goal was to size up a startup for acquisition—until just recently. In December, Nielsen announced plans to back a newly launched venture capital fund, Pereg Ventures.
The research giant only took a $10 million minority stake in the $50 million fund, but it made a significant investment in letting Fisher split time between serving as Nielsen’s evp of global business development and Pereg’s chairman. Now, he and the firm’s CEO, Claudia Iannazzo, are about to sign their first company.
“I would love to tell you [the name of the company], but we have to get the term sheet signed first,” Iannazzo told Adweek on Tuesday. “Give us a week.”
Pereg may appear delayed in not signing its first company until more than a month after the fund was announced, but Fisher and Iannazzo may actually be a bit ahead of schedule. The duo are still closing their expected $50 million in funding, projected to wrap by the end of the first quarter, Iannazzo said. “It was not our plan to invest in companies before we close the fund,” she said. Yet here they are “very close” to signing its first term sheet. Iannazzo wouldn’t go into details about the startup in question but suggested it plays in the analytics space.
As for Pereg’s overall intentions, the fund is looking to stock its portfolio with 15 companies that are past their first stage of funding and raise a second, or Series A, round. The idea is to put half of the $50 million fund into those initial investments and the other half into the following two or three rounds. That should have startups salivating, and does. “Deal float is not our problem,” Iannazzo said. In the month since the fund was announced, Iannazzo has received email pitches from more than 50 startups hoping to crack that list of 15.
To earn Pereg’s favor, a startup needs to meet several criteria. It has to have raised seed capital so the firm’s partners can evaluate how it previously spent money. It has to have functioning technology and a prototype. And it has to have good management. Fisher said a startup’s size and revenue are not immediate deal breakers.
Pereg’s openness to a startup’s current fiscal standing is partially a function of the fact that early-stage companies typically aren’t profitable and of the firm’s intended role as a strategic advisor rather than financial investor. “We are totally not a financial investor,” Fisher said. Instead, Pereg’s aim is to help its portfolio companies establish partnerships to aid their growth. “Nielsen has all the major media companies and ad agencies and consumer-facing companies as clients. When we put [Nielsen’s involvement] in effect, we get meetings with the right person in a short amount of time,” said Fisher.
As for the types of startups Pereg is looking to invest in, “the net is advertising and marketing technology,” Iannazzo said. She broke that common thread down into three specific areas: ad spend management tools, data analytics and traditional media disruptors. For the first category, Pereg is looking for tools that could enhance the ad spending process to produce more dynamic campaigns. The second category revolves around data analytics, particularly companies interested in measuring things that haven’t been measured before, or “areas where people typically pound the street to collect information,” Iannazzo said. The final category includes companies looking to reinvent traditional media, like making a billboard more reactive to whoever’s viewing it or connecting digital channels like TV, mobile and online.
The fact that the three outlined areas align with Nielsen’s position as a top measurement company is no coincidence, nor is Fisher’s position in straddling both outfits. For the past five years, Nielsen has made a big effort to combine its data set to give advertisers better targeting and return on their spending, he said. To that end, Nielsen has met with endless digital startups to familiarize itself with the available technologies. Those fact-finding missions typically sought to result in an acquisition, such as last year’s deals for ad measurement and optimization platform Vizu and social TV tracker SocialGuide. However “it became apparent that in order to keep up with what’s out there, we would not be able to do it in the old way of just acquiring,” he said.
Through Pereg, Nielsen will have an inside look at startups “earlier than [Nielsen] is comfortable to do as a company” and be able to indirectly guide their maturation (Fisher made clear Nielsen has given the venture firm complete operational freedom, such as not demanding first right of refusal). While Pereg intends to see its startups grow through multiple funding rounds, should a startup become ripe for an exit ... well, fund chairman Fisher would need only put on his other hat.